Given the following historical annual returns on Alpha stock over the period 2016-2020, -4%, 10%, 2%, -22%, and 8%, calculate the average return, the variance, standard deviation, and coefficient of variation for this stock. Interpret your answers.

B. (6 marks) Suppose you equally invest $700,000 in two stocks with the following characteristics: Stock X has an expected return of 10% and a standard deviation of 8%. Stock T has an expected return of 18% and a standard deviation of 14.

Determine the expected return and standard deviation on a portfolio of stocks X and T, when the two stocks have a negative correlation of -0.5 and when they are positively perfectly correlated.

Interpret and compare your answers in these two cases.